The recent GBP/USD decline last week indicates a rejection of the 55 EMA (now at 1.3453), which is a bearish signal. But the downside is above the 1.3300 support level. Initial bias remains neutral this week first. A break of 1.3300 will target a retest of 1.3158. A strong breakout there would extend the entire decline from 1.3867 to a 100% forecast of 1.3867 to 1.3158 from 1.3657 at 1.2948. For now, the risk is slight to the downside as long as resistance at 1.3508 holds, in case of a recovery.
In the bigger picture, price action from 1.3867 is a corrective pattern within the broader uptrend from 1.0351 (2022 low). With support holding at 1.3008, the upward trend continues in the medium term and a break of 1.3867 is likely for a later stage, towards the main resistance 1.4248 (2021 high). However, a strong break of 1.3008 would at least lead to a deeper decline to the 38.2% retracement from 1.0351 to 1.3867 at 1.2524, with an increased risk of a bearish reversal.
In the longer term picture, as long as the 1.4248/4480 resistance area holds (38.2% retracement from 2.1161 to 1.0351 at 1.4480), the long term outlook will remain bearish. That is, price movements from 1.0351 are considered a corrective pattern for the downtrend from 2.1161 (2007 high) only. However, a decisive break of 1.4248/4480 would be a strong signal of a long-term bullish reversal.
